United States District Court, D. New Jersey
NEW JERSEY BUILDING LABORERS' STATEWIDE BENEFIT FUNDS AND THE TRUSTEES THEREOF, Plaintiffs,
DEMZA MASONRY LLC, Defendant.
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
matter comes before the Court on a motion for summary
judgment filed by Plaintiffs New Jersey Building
Laborers' Statewide Pension Fund and the Trustees Thereof
(the "Pension Fund") and the New Jersey Building
Laborers' Statewide Benefit Funds and Trustees Thereof
(the "Funds") (together, "Plaintiffs")
(ECF No. 23) and on a cross-motion for summary judgment filed
by Defendant Demza Masonry LLC ("Demza") (ECF No.
31). In this action, Plaintiffs seek to hold Demza liable for
defunct J. Speranza Brickwork, Inc. d/b/a Speranza Brickwork,
Inc.'s ("Speranza Inc.") delinquent
contributions to a multiemployer benefit plan and withdrawal
liability pursuant to ERISA. Specifically, Plaintiffs assert
that the doctrines of alter ego liability, successor
liability, and controlled group liability render Demza
jointly and severally liable for Speranza Inc.'s ERISA
Inc. was a New Jersey-based construction contractor bound to
a Collective Bargaining Agreement ("CBA") with the
New Jersey Building Construction Laborers' District
Council and its Local Unions (the
"Union"). (Plaintiffs' Statement of Material
Facts Not in Dispute ("Plaintiffs' SMFND")
¶ 8, ECF No. 23-3). Under the terms of the CBA, Speranza
Inc. was obligated to hire members of the Union to perform
certain bargaining unit work covered by the CBA. (Id.
the terms of the CBA, Speranza Inc. was obligated to pay
CBA-scale wages and remit fringe benefit contributions to
Plaintiffs for work performed by its employees. (Id.
¶ 10). Speranza Inc. paid fringe benefit contributions
to Plaintiffs until about 2014. (Id. ¶ 11). On
or about August 27, 2014, the United States District Court of
the District of New Jersey entered judgment in New Jersey
Building Laborers Statewide Benefit Funds and the Trustees
Thereof v. Speranza Brickwork, Inc., No.l3-cv-7272, in
favor of the Funds and against Speranza Inc. for delinquent
contributions for the period of January 1, 2007 through
December 31, 2010, in the amount of $4, 901, 819.05.
(Id. ¶ 12). On or about May 12, 2015, Speranza
Inc. filed for Chapter 7 bankruptcy protection in the United
State Bankruptcy Court for the District of New Jersey, in a
matter captioned In Re: J. Speranza Brickwork, Inc.,
No. 15-cv-18907. (Id. ¶ 13). Speranza Inc. was
discharged from bankruptcy on or about December 5, 2017.
(Id. ¶ 14). Thereafter, Speranza Inc. ceased
making contributions to the Pension Fund and therefore
permanently effected a "complete withdrawal" from
the Pension Fund, within the meaning of ERISA § 4203, 29
U.S.C. § 1383. (Id. ¶ 15). The Pension
Fund calculated Speranza Inc.'s withdrawal liability as
$7, 778, 286.00. (Id. ¶ 16).
about November 8, 2017, the Pension Fund prepared a payment
schedule for Speranza Inc.'s withdrawal liability, as
well as a demand for payment in accordance with the payment
schedule, and forwarded same to Speranza Inc. and Demza.
(Id. ¶ 17). After the first quarterly
installment was not received, on or about March 22, 2018, the
Pension Fund advised Speranza Inc. and Demza of their failure
to remit said quarterly installment and that Speranza Inc.
and Demza were in default of their obligation. (Id.
¶ 18). On or about March 22, 2018, the Pension Fund
notified Speranza Inc. and Demza that if they did not cure
the default within sixty (60) days of receipt of the written
notification, Plaintiffs would require the immediate payment
of the outstanding liability from the due date of the first
payment which was not timely made. (Id.). Speranza
Inc. and Demza failed to cure the default, and, as a result,
Plaintiffs brought two separate actions, now consolidated
before the Court, seeking the outstanding withdrawal
liability, as well as unpaid fringe benefit contributions,
liquidated damages, interest, and attorneys'
fees.(Id. ¶¶ 19, 21).
of background, Joe Speranza was the president and sole owner
of Speranza Inc., a masonry subcontractor. (Id.
¶ 30). Speranza Inc. operated out of 15 High Street,
White House Station, New Jersey 08889 (the "Whitehouse
Station Location"), which was then owned by Mr.
Speranza's mother and sister. (Id.). Speranza
Inc. ceased operations in late 2012 or early 2013 because the
company "was no longer making money." (Id.
¶¶ 13, 24, 30; Deposition of Joe Speranza
("Speranza Dep.") at 54:1-3, Certification of Seth
Ptasiewicz, Esq. in Support of Motion for Summary Judgment
("Ptasiewicz Cert.," Ex. L, ECF No. 23-2)). A labor
union dispute in 2010 also contributed to Speranza Inc.'s
financial woes. (Affidavit of Joseph Speranza ¶ 8,
Ptasiewicz Cert, Ex. I).
being unemployed for several months, Mr. Speranza was advised
by a contact in the construction industry of an employment
opportunity with a new masonry company. (Id.
¶¶ 13, 14). After successfully following up on that
lead, in or around January 2016, Mr. Speranza began working
with Tim O'Brien and Willie Dempsey at the new masonry
company, which was ultimately named Dempsey, O'Brien,
Speranza ("DOS"). (Speranza Dep. at 43:8-14).
Despite the name, Mr. Speranza was not offered an ownership
interest in DOS. (Id. at 43:17-19). He was employed
by DOS as an office manager and estimator. (Id. at
43:24-44:1). DOS, however, completed only one project before
the relationship between Mr. O'Brien and Mr. Dempsey
soured and the company ceased operations in 2016.
(Id. at 44:2-18).
around July 2016, Mr. Dempsey formed Demza and subsequently
hired Mr. Speranza as an "estimator/office manager/vice
president." (Plaintiffs' SMFND ¶¶ 38, 46,
50). Demza was originally located in Maspeth, New York, but
later relocated to the Whitehouse Station Location, where
Speranza Inc. formerly operated. (Id. ¶ 47). By
the time Demza began operating, however, Mr. Speranza's
siblings no longer owned the Whitehouse Station Location as
the property was in receivership. (Deposition of Willie
Dempsey ("Dempsey Dep.") at 17:15-19-9, Ptasiewicz
Cert, Ex. K). Thus, Demza did not rent its operations space
from Mr. Speranza's family.
Dempsey never offered Mr. Speranza an ownership interest in
Demza. (Plaintiffs' SMFND ¶ 39). Rather, Mr. Dempsey
has been the sole owner and president of Demza since the
company's inception in July 2016. (Id. ¶
Speranza is currently employed by Demza. In Mr.
Speranza's role as an "estimator/office manager/vice
president for Demza," he handles the bidding of
projects, payroll, and signs checks. (Id. ¶
39). In essence, Mr. Speranza manages Demza's office
functions, while Mr. Dempsey is responsible for Demza's
operations in the field. (Speranza Dep. at 14:18-20). Demza
has employed several other former Speranza, Inc. employees
throughout the years, in addition to Mr. Speranza.
(Plaintiffs' SMFND ¶¶ 71-75).
has never worked on any of the same projects as Speranza Inc.
or DOS. (Speranza Dep. at 54:11-19). However, the record
provided is unclear as to whether Speranza Inc. and Demza
shared the same body of customers.
are other facts that are not fully explained including, among
other things: (1) how Speranza Inc.'s overall management
compares to Demza's (e.g., putting aside Mr.
Speranza's purported management functions in both
companies); (2) how Speranza Inc.'s operations compare to
Demza's (e.g., putting aside the fact that they
both operate (or operated) as masonry contractors); and (3)
how Speranza Inc.'s supervision compares to Demza's,
particularly in view of the fact that Plaintiffs seem to
allege that Mr. Speranza only had one direct report at Demza,
Tony Triola (Plaintiffs' SMFND ¶ 62). Additionally,
there are no proofs submitted that Mr. Speranza received
extraordinary salary or bonuses which may indicate who is the
actual owner of the business.
support of its cross-motion, Demza submits that the National
Labor Relations Board ("NLRB") has previously
investigated whether it was an alter ego of Speranza, Inc.
and found that it was not. In that case, Local 4, Bricklayers
and Allied Craftworkers' Administrative District Council
of New Jersey (the "trade union") filed a charge
with the NLRB against Speranza Inc. and Demza alleging that
the companies failed and refused to provide the trade union
with "necessary and relevant information."
(Demza's Moving Br., Ex A at 1, ECF No. 31-3). By letter
dated September 27, 2018, the NLRB dismissed the charge
finding that there was insufficient evidence adduced to
support the trade union's theory that an alter ego
relationship exists between Speranza Inc and Demza.
(Id.). In particular, the NLRB's Regional Office
Although Demza also commenced its operations at
Speranza's former location in 2017, the investigation did
not reveal that Joe Speranza, [Speranza Inc.'s] former
sole owner, has had an ownership interest in Demza. Moreover,
although Joe Speranza is employed as Demza's Vice
President and Estimator, there is no evidence that he has any
control over Demza. Additionally, the investigation failed to
reveal sufficient evidence that the two entities share common
equipment, management/supervision or customers. To that end,
Speranza's equipment was liquidated during its 2015
Bankruptcy proceedings and no evidence was revealed that
Demza purchased any of Speranza's equipment. With respect
to common management and supervision, the investigation
revealed that out of 11 Speranza superintendents/foreman,
only 3 are employed by Demza in the same or similar capacity.
Additionally, out of approximately 13 Speranza's
customers, Demza has done business with only one. Finally,
there is no evidence that Demza was created to evade its
responsibilities under the [National Labor Relations] Act.
Given these circumstances, the lack of common ownership,
control, equipment, and insufficient evidence of common
management, supervision and common customers precludes a
finding that an alter ego relationship exists between
Speranza and Demza.
(Id. at 2). On November 20, 2018, the NLRB's
General Counsel affirmed its Regional Office's decision
on appeal. (Demza Moving Br., Ex. B).
judgment is appropriate under Federal Rule of Civil Procedure
56(c) when the moving party demonstrates that there is no
genuine issue of material fact and the evidence establishes
the moving party's entitlement to judgment as a matter of
law. Celotex Corp. v. Catrett,477 U.S. 317, 322-23
(1986). A factual dispute is genuine if a reasonable jury
could return a verdict for the non-movant, and it is material
if, under the substantive law, it would affect the outcome of
the suit. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). In considering a motion for summary
judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party's evidence ...